Co-Operation 

Between  the  Railway  Owner,  The 
Railway  Employe  and  The 
Railway  User 


ADDRESS 

BY 

HOWARD  ELLIOTT 

PRESIDENT,  NORTHERN  PACIFIC  RAILWAY 

AT  THE 


Montana  State  Fair 

HELENA,  MONTANA 
September  26,  1910 


CO-OPERATION 

BETWEEN 

THE  RAILWAY  OWNER,  THE  RAILWAY  EMPLOYE 
AND  THE  RAILWAY  USER 


It  is  a compliment  indeed  to  be  asked  to  speak  to  this  gathering 
of  the  good  people  of  Montana,  on  an  occasion  of  this  significance 
and  importance.  In  a state  like  Montana,  practically  on  the  thresh- 
old of  its  argicultural  development,  every  agency  promoting  the 
same,  and  stimulating  better  farming  methods  is  important,  and 
certainly  not  the  least  of  these  agencies  is  a well  managed  State 
Fair  such  as  this,  with  its  splendid  display  of  agricultural  object 
lessons.  No  one  can  visit  such  an  exhibition  without  profiting 
thereby,  but  especially  should  be  commended  its  high  educational 
value  to  the  farmer  of  the  state.  My  remarks  are  to  deal  with 
another  of  the  important  agencies  for  promoting  agricultural  de- 
velopment, the  railways.  Co-operation  is  defined : “The  association 
of  a number  of  persons  for  their  common  benefit,”  and  my  purpose 
is  to  show  the  absolute  necessity,  if  prosperity  and  progress  are  to 
continue,  of  “Co-operation  between  the  Railway  Owner,  the  Rail- 
way Employe  and  the  Railway  User.” 


The  In  order  to  consider  this  question,  a brief  statement 

Railways,  must  be  made  showing  what  the  railway  system  of 
the  United  States  is  to-day;  what  it  represents;  the 
work  it  does,  and  the  work  it  must  prepare  to  do  if  safe  and 
adequate  transportation  is  to  be  furnished  to  the  people  of  the 
United  States.  The  railways  of  the  country,  in  their  present 
form,  have  been  built  since  the  close  of  the  Civil  War,  or  in 

3 

358 


less  than  fifty  years,  and  are  the  wonder  and  admiration  of 
students  of  the  transportation  problem  who  come  here  from 
other  countries.  There  are  234,182  miles  of  railway,  and  more 
than  340,000  miles  of  track  in  this  country,  as  compared  with 
a trifle  less  than  300,000  miles  of  railway  in  all  the  other  coun- 
tries of  the  world  combined.  There  are  nearly  58,000  loco- 
motives ; more  than  45,000  passenger  train  cars ; nearly  2,200,- 
000  freight  and  service  cars. 

Work  On  these  tracks,  and  with  these  engines  and  cars 

Done.  were  run  in  the  year  ending  June  30,  1909,  freight 

trains  for  560,602,557  miles,  and  passenger  trains  for 
491,903,107  miles,  or  an  average  of  2,883,577  miles  every  day 
in  the  year.  This  is  equal  to  a trip  around  the  world  at  the 
equator  116  times  each  24  hours. 

These  trains  handled  in  the  year  ending  June  30,  1909, 
217,756,776,000  tons  of  freight  one  mile  and  29,452,000,000  pas- 
sengers one  mile.  The  significance  of  these  figures  will  be  bet- 
ter understood  by  stating  that  they  are  the  equivalent  of  haul- 
ing a ton  of  freight  2,419  miles  for  every  man,  woman  and  child 
in  the  United  States,  and  giving  each  of  them  a ride  on  a pas- 
senger train  of  327  miles. 

The  number  of  tons  of  freight  moved  over  each  mile  of 
railway  during  a year  is  the  measure  of  the  freight  work  per- 
formed for  the  country  by  the  railways.  There  was 

In  the  United  States 969,000  tons  one  mile  in  1909 

In  England  530,000  tons  one  mile  in  1908 

In  Germany 880,000  tons  one  mile  in  1908 

In  France 497,000  tons  one  mile  in  1907 

showing  that  the  American  railways  are  furnishing  a greater 
service  per  mile  of  railway  than  the  older  countries. 

Right  here  in  Montana  the  Northern  Pacific  for  the  year 
ending  June  30,  1910,  furnished  freight  transportation  equal 
to  1,586,801  tons  one  mile  for  every  mile  of  its  track  in  the 
State,  over  mountains  and  through  heavy  snow  storms  for  part 


4 


of  the  year.  On  parts  of  the  main  line  more  than  3,000,000  tons 
of  freight  per  road  mile  were  moved,  or  transportation  in  excess 
of  the  average  of  the  United  States  railways. 

Need  for  Since  1889  the  miles  of  railway  in  the 

Increased  Facilities.  United  States  have  increased  5 2.7%  ; the 

passengers  carried  one  mile  on  those  rail- 
ways have  increased  154.8%,  and  the  tons  of  freight  carried 
one  mile  224.3%;  the  number  of  employes  116.2%,  and  the 
taxes  230.8% 

With  90,000,000  busy  people  in  this  country  the  next  20 
years  must  see  a constant  addition  to  the  railway  facilities  of 
the  country  if  the  commerce  is  to  be  moved  satisfactorily,  and 
the  Railway  User  must  see  to  it  that  the  Railway  Owner  has 
sufficient  margin  to  justify  the  enormous  additional  investment 
that  must  be  made  in  order  to  provide  the  needed  transpor- 
tation. 

Passenger  Service  The  passenger  trains  of  the  United  States 
and  Rates.  earned  on  the  average  for  the  year  end- 

ing June  30,  1908,  $1.27  per  train  mile, 
and  the  average  cost  per  train  mile  for  expenses,  not  allowing 
anything  for  taxes,  using  the  total  freight  and  passenger  train 
miles,  was  $1.47. 

From  this  it  is  plain  that  there  is  no  margin  in  the  passenger 
business  for  taxes,  interest  and  dividends,  and  that  passenger 
train  service,  as  a whole,  is  furnished  without  profit,  and  often 
to  the  detriment  of  the  freight  business,  which  must  be  moved 
promptly  for  the  development  of  the  country. 

This  country,  as  it  grows  in  population  and  wealth  wants 
more  and  better  passenger  train  service,  and  better  stations, 
just  as  it  wants  more  and  better  hotels  and  more  and  better 
street  paving  and  lighting,  more  and  better  restaurants;  but 
in  the  case  of  the  hotels,  paving,  lighting,  restaurants  and  many 
other  things,  the  public  are  willing  to  pay  more,  and  do  pay 
more  for  the  better  facilities.  Not  so  with  the  railways;  with 


5 


more  trains,  heavier  trains,  faster  trains,  more  luxurious  trains, 
and  better  track,  there  has  swept  over  the  country  a wave  of 
legislation  for  a 2-cent  fare.  The  2-cent  maximum  fare  is 
unjust,  and  retards  the  development  of  the  very  things  the  Rail- 
way User  wants,  because  it  is  obvious  the  Railway  Owner  must 
sooner  or  later  stop  doing  so  much  work  without  any  margin 
of  profit  at  all. 

In  England  the  first-class  passenger  rate  is  4 cents;  second- 
class  2*4  cents,  and  the  third-class  2 cents. 

In  Germany,  the  first-class  is  3 cents;  second-class  2.55 
cents;  third-class  1.79  cents,  but  the  second  and  third-class 
accommodations  in  England  and  Germany  are  nowhere  near 
as  good  as  those  furnished  the  traveler  in  the  United  States. 

Freight  Service  In  Great  Britain  the  average  freight  charge 
and  Rates.  for  handling  a ton  of  freight  100  miles  was 

$2.31  in  1907  and  $2.33  in  1908. 

In  Germany  the  average  charge  was  $1.42  in  1908;  in  France, 
$1.46;  Austria,  $1.39;  Belgium,  $1.22. 

The  great  freight  service  of  the  American  railways  was 
furnished  in  1908  and  in  1909 — at  an  average  charge  of  75  cents 
for  handling  a ton  100  miles. 

In  1888,  the  average  rate  per  passenger  mile  in  the  United 
States  was  2.35  cents,  and  in  1908  only  1.937  cents,  and  yet 
the  accommodations  provided  have  constantly  improved  in 
quality. 

In  1870,  the  average  rate  for  handling  a ton  of  freight  100 
miles  was  $1.99,  and  in  1909  75.4  cents,  or  a reduction  in  40 
years  of  62%. 

Saving  to  the  Railway  The  Railway  Owner,  by  his  courage, 
User  Through  energy  and  intelligence  in  adopting 

Decline  in  Rates.  advanced  methods,  has  been  able  to 

improve  the  railway  system  of  the 
United  States  steadily  in  the  last  40  years  and  still  maintain 
and  operate  his  property  in  spite  of  this  reduction  in  rates. 


If  the  Railway  User  had  paid,  for  the  year  which  has  just 
passed,  the  same  average  freight  rates  as  in  1870,  he  would  have 
paid  $2,691,473,751.36  more  than  he  did  pay;  if  he  had  paid 
the  same  average  rates  per  passenger  mile  as  in  1888,  the  addi- 
tional payment  would  have  been  $147,260,000,  the  two  amounts 
being  greater  than  the  entire  earnings  of  all  the  United  States 
railways  in  the  last  year. 

Limit  of  But  the  Railway  Owner  is  now  put  to  it  to  main- 
Economy.  tain  and  operate  his  property  on  the  basis  of 
present  rates,  present  wages,  present  prices  for 
material,  present  taxes,  present  rigid  government  restrictions, 
and  the  growing  demand  of  a prosperous  people  for  more  and 
better  service. 

Railways  are  using  rails  of  90  and  100  pounds  weight  to  the 
yard ; freight  cars  carrying  50  and  60  tons  of  freight ; passenger 
cars  weighing  50  and  70  tons  often  carrying  only  a dozen  people, 
or  five  tons  of  dead  weight  for  one  passenger,  and  locomotives 
weighing  300,000  to  600,000  pounds,  with  58,000  pounds  on  a 
single  axle.  The  Railway  Owner  can  go  no  farther  in  using 
larger  tools  in  his  plant  and  must  depend  for  any  further  econo- 
mies upon  an  improvement  in  the  work  of  the  Railway  User  and 
Employe  in  using  that  plant.  If  the  Railway  User  fails  to  load 
and  unload  the  cars  promptly,  if  the  Railway  Employe  is  care- 
less and  inefficient,  the  railway  cannot  be  used  to  its  full  effect. 

Capitalization.  The  American  railways  to-day  are  represented 
by  a capitalization  of  $13,600,000,000,  or  a trifle 
less  than  $58,000  per  mile  of  road,  and  less  than  $40,000  per 
mile  of  track.  Compare  this  total  capitalization  with  the  total 
reported  for  farm  values — $20,514,001,838  for  1900,  and  in  man- 
ufacturing— $12,686,265,673  for  1905,  and  it  will  be  seen  that 
the  railway  is  the  second  great  industrial  interest  in  this  coun- 
try. The  railways  in  Europe  are  capitalized  per  mile  as  fol- 


lows : 

United  Kindgom $275,040 

France 1 39*39° 


7 


Germany 
Austria  . 
Russia  . . 
Belgium 


$109,788 

112,879 

80,985 

169,806 


Here  is  evidence  that  the  American  Railway  Owner  has 
produced  a piece  of  machinery  with  far  less  average  capitaliza- 
tion than  in  any  other  country;  which  does  more  work  in 
moving  the  commerce  of  the  country  per  mile  of  railway  than 
in  any  other  country,  and  which  has  steadily  reduced  the  prices 
charged  to  the  Railway  User  in  spite  of  increasing  costs  and 
complications  in  doing  the  buisness.  The  American  railway 
system  of  to-day  could  not  be  reproduced  for  a figure  anywhere 
near  what  it  stands  for  on  the  books.  Monthly,  daily,  almost 
hourly,  improvements  have  been  made,  and  the  railways  are 
becoming  seasoned  and  better  adapted  to  the  great  work  they 
have  to  perform.  Go  to  any  of  the  large  cities  and  growing 
towns  and  try  to  acquire  sufficient  terminal  ground  to  do  even 
a moderate  business.  Not  long  ago  in  New  York,  an  investiga- 
tion was  made  with  the  idea  of  seeing  what  it  would  cost  to 
get  an  entrance  to  the  city  and  a moderate  terminal  area,  from 
the  northern  boundary  down  to  about  Fortieth  Street.  One 
of  the  best  real  estate  agents  in  New  York  made  a calculation, 
and  a right  of  way  down  through  Manhatton  Island  sufficient 
for  two  tracks  and  with  a limited  terminal  at  the  end,  he  thought 
might  be  obtained  for  $170,000,000,  but  would  probably  cost 
$200,000,000.  This  would  be  an  investment  of  $170,000  or 
$200,000  a mile  for  the  New  York  terminal  alone  of  a railroad 
between  Chicago  and  New  York,  and  in  addition  right  of 
way  between  the  two  cities,  intermediate  terminals,  and  the 
railway  itself  must  be  obtained.  And  every  man  of  his  own 
knowledge  is  aware  of  the  fact  that  property  suitable  for  ter- 
minals, in  common  with  other  real  estate,  has  advanced  very 
much  in  value  in  all  cities,  big  and  little,  in  the  United  States 
in  the  last  25  years,  and  that  the  Railway  Owner  is  paying 
taxes  on  those  increased  values  and  is  surely  as  much  entitled 
to  a return  on  the  increased  value  as  is  the  owner  of  a farm, 
or  the  owner  of  a business  block. 


8 


THE  RAILWAY  OWNER. 


Now,  who  is  the  owner  of  this  enormous  and  complicated 
piece  of  machinery  built  up  in  the  last  50  years?  The  best  figures 
obtainable  as  to  the  number  of  stockholders  show  440,000,  and 
while  the  number  of  bondholders  cannot  be  determined  with  the 
same  accuracy,  information  about  a few  roads  indicates  that  the 
number  of  bondholders  exceeds  the  number  of  stockholders,  and 
that  1,000,000  is  not  an  unfair  figure  to  represent  those  holding 
railway  securities.  Many  of  these  holders  are  women  and  children, 
charitable  and  educational  institutions,  National  banks,  Savings 
banks,  trust  companies  and  insurance  companies.  The  average 
for  each  owner  of  railway  property  in  this  country  is  $13,600.  Of 
course,  some  individuals  hold  more  than  this,  and  very  many  hold 
much  less,  but  the  statement  that  railways  are  owned  and  controlled 
by  a few  very  rich  men  is  not  correct.  These  1,000,000  owners 
represent  at  least  4,000,000  people  in  the  United  States  whose  daily 
bread  and  butter  depends  more  or  less  on  the  success  or  failure 
of  the  railways. 

Now,  this  Railway  Owner,  with  an  average  ownership  of  $13,- 
600,  is  dependent  entirely  as  to  a return  on  his  investment,  and  as 
to  the  safety  of  his  principal,  on  the  honesty,  intelligence  and  effi- 
ciency of  the  Railway  Employe,  and  to  the  sense  of  justice  and  fair 
treatment  of  the  Railway  User.  The  Railway  Owner,  if  he  does 
not  like  his  investment,  cannot  shut  up  shop  and  wait  a while  until 
business  is  better.  He  cannot  even  abandon  his  business  and  pocket 
his  loss.  He  must  go  on,  whatever  the  conditions  may  be,  with 
the  hope  that  the  ultimate  good  sense  and  justice  of  the  American 
people  will  give  him  even  a part  of  that  protection  and  encourage- 
ment that  is  given  to  those  who  may  be  engaged  in  agriculture  and 
in  manufacturing. 

Then,  in  1909,  there  were  8,831,863  depositors  in  savings 
banks,  having  $3,713,405,710  on  deposit.  In  1908,  there  were  25,- 
852,405  separate  life  insurance  policies  held  in  this  country  with  a 
face  value  of  $14,518,952,277.  Every  savings  bank  depositor  and 
every  holder  of  a life  insurance  policy  is  interested  in  having  rail- 
way securities  safe  and  profitable,  because  the  savings  banks  and 


9 


the  Life  Insurance  Companies  are  all  holders  of  Railway  securities, 
and  anything  that  affects  the  welfare  of  those  two  great  institu- 
tions affects  millions  of  people  outside  of  the  owners  of  railway 
stocks  and  bonds.  In  1909  there  was  $33,117,068,129  of  fire  in- 
surance written  in  the  United  States  and  $126,171,492  fire  losses 
paid.  The  large  Fire  Insurance  Companies,  like  the  large  Life  In- 
surance Companies  are  investors  in  railway  bonds  and  stocks.  The 
Savings  Banks  and  Insurance  Campanies  must  have  assets  that  pay 
a sure  return  and  that  can  be  converted  easily  and  quickly  into 
cash  and  their  ability  to  pay  depends  in  part  upon  the  stability  and 
earning  power  of  the  great  railway  corporations. 

Earnings  of  For  the  years  1906,  1907  and  1908,  complete 
the  Railways,  statistics  are  furnished  by  the  Commerce  Com- 
mission. These  were  three  years  of  fairly 
good  business  in  the  country,  when  farmers  and  manufacturers 
did  well. 

In  round  figures,  the  results  to  the  railways  of  the  country  from 
the  transportation  of  persons  and  property  were : 

1906  1907  1908 


Total  Earnings $2,325,765,167  $2,589,105,578  $2,394,780,410 

Total  Exp.  and  Taxes 1,611,662,886  1,828,828,189  1,754,951,949 

Net  Earnings 714,102,281  760,277,389  639,828,461 


These  are  very  large  sums,  but  the  net  earnings  only  represent 
on  an  average  valuation  of  $13,000,000,000,  5.49%  for  1906; 
5.85%  for  1907;  4.92%  for  1908 — not  a very  large  return  if  the 
Railway  Owner  could  take  it  all,  but  he  must  of  necessity,  use  a 
liberal  share  of  any  such  net  earnings  for  a multitude  of  improve- 
ments and  additions  to  the  railways,  for  as  the  Commerce  Commis- 
sion says  in  its  report  for  1908,  “Every  safely  administered  rail- 
road should  recognize  the  difficulty  of  bringing  operating  expenses 
under  control,  and  in  times  of  prosperity  provide  against  the  con- 
tingency of  reduced  traffic.’, 

The  Railway  Owner  recognizes  this,  for  there  was  paid  for  in 
interest  and  dividends,  in  the  years  named,  1906 — $518,893,000 
or  3.99%;  1907 — $551,129,000  or  4.24%;  1908 — $571,114,000 
or  4.39%,  the  balance  going  back  into  the  property.  In  fact,  in 


order  to  keep  up  a great  piece  of  machinery  like  the  railway,  sub" 
ject  to  damage  in  many  ways,  and  needing  constant  additions,  an 
amount  at  least  equal  to  60%  of  that  paid  in  dividends  should  be 
put  back  out  of  current  earnings  into  the  property  each  year.  How 
many  farmers,  merchants  and  miners  in  Montana  think  these 
returns  are  attractive  enough  to  justify  their  engaging  in  the  busi- 
ness? 


What  Use  is  Made  of 
Each  Dollar  of  Earnings? 

Labor — direct  payment 

Labor  in  materials  purchased 
Labor  in  fuel  and  oil 


Out  of  every  one  hundred  dollars 
of  gross  earnings  of  the  railways  in 
1908  there  was  paid  for: 

$ 43- 36 

777 

6.88 


Total  for  labor $ 58.01 

Fuel  and  oil — less  labor $ 1.72 

Material — less  labor 3.33 

Hire  of  equipment  and  buildings 2.46 

Hire  of  tracks  and  terminals 4.60 

Damages  and  injuries 1.80 

Taxes 3.56 

Interest 13.34 

Deficits 2.39 


Total $ 91  21 

Betterments  to  property,  etc $ 4.37 

Dividends 4.42 


, $100.00 

Out  of  each  one  hundred  dollars  ninety-one  dollars  was  paid 
out  for  labor,  material,  taxes,  rents,  interest,  all  of  which  must  be 
paid  if  the  Railway  Owner  is  to  keep  out  of  the  hands  of  the  Sheriff. 
The  balance,  nine  dollars,  was  available  for  improving  the  property 
and  for  dividends  and  the  margin  is  very  small. 


11 


THE  RAILWAY  EMPLOYE. 


There  are  1,525,000  railway  employes  including  the  officers,  rep- 
resenting at  least  6,000,000  of  the  population  of  this  country.  They 
are  equal,  in  honesty,  intelligence,  industry,  and  character  to  the 
average  of  American  citizens  engaged  in  other  pursuits.  They  are 
trying  to  do  their  part  in  managing  and  operating  this  great  piece 
of  commercial  machinery  that  the  Railway  Owner  has  created.  As 
they  are  human,  they  make  mistakes,  and  sometimes  forget  that  they 
assume  an  obligation  when  they  enter  the  railway  service,  to  be 
honest,  fair  and  loyal  to  the  Railway  Owner,  and  to  the  Railway 
User.  The  great  army  of  railway  employes  in  their  efforts  to  ob- 
tain the  highest  wages  possible  must  remember  that  there  are  only 
100  cents  in  a dollar;  that  it  is  possible  to  force  wages  to  a point 
beyond  the  ability  of  the  Railway  Owner  to  pay  and  still  maintain 
his  plant  for  the  benefit  of  the  Railway  User,  and  that  the  constant 
wage  increase  has  already  discouraged  the  Railway  Owner,  and  will 
tend  to  discourage  him  more  unless  additional  revenue  can  be  ob- 
tained from  the  Railway  User.  The  Railway  User  often  fails 
to  understand  the  wage  situation,  and  the  Railway  Employe  and 
the  Railway  User  must  remember  that  in  fixing  wages  they  must 
consider  the  ability  of  the  business  to  pay  the  wages  demanded. 

In  1908,  the  official  figures  show  that  there  were  1,458,244  rail- 
way employes  receiving  $1,051,632,225.00  in  wages,  or  an  average 
of  $721.16  per  year.  For  the  year  1907,  the  average  pay  of  rail- 
way employes  in  the  United  Kingdom  was  $260.00;  in  Germany 
$371.00;  in  Switzerland  $292.00;  in  Belgium,  where  the  railways 
are  owned  by  the  state,  firemen  received  $15.00  to  $23.00  a month, 
the  higher  rate  only  after  15  years  service;  enginemen  from  $22.50 
a month  to  $28.00  a month  after  twenty-four  years  service;  con- 
ductors from  $15.97  a month  to  $34.70.  The  average  railway 
worker  in  Belgium  gets  43  cents  a day.  Certain  classes  of  Amer- 
ican railway  employes  get  more  in  a month  than  Belgium  railway 
employes  average  in  a year. 

The  advances  made  in  wages  in  1906  and  1907  increased  the 
pay  rolls  of  the  railways  about  $120,000,000  and  increases  since 
then  and  now  under  discussion  mean  $60,000,000  to  $75,000,000 


12 


additional.  These  two  increases  are  equal  to  7%  per  year  on  a 
capitalization  of  from  $2,500,000,000  to  $2,750,000,000,  a sum  of 
money  that  would  go  a long  way  in  adding  to  the  transportation 
facilities  of  the  country. 

Responsibility  of  the  The  Railway  Employe  has  a respon- 
Railway  Employe.  sibility  to  the  Railway  User  to  be 

sober,  industrious  and  careful,  so  as 
to  furnish  the  best  and  safest  transportation  to  the  public, 
and  he  has  a responsibility  to  the  Railway  Owner  to  furnish 
a full  day’s  honest  and  efficient  work  for  the  compensation 
that  he  receives,  whatever  it  may  be.  The  industrial  suprem- 
acy of  America  cannot  be  maintained  unless  that  is  done, 
and  every  patriotic  man,  no  matter  what  his  employment, 
should  stop  waste  in  labor  as  well  as  in  material,  and  expect 
hard  work  and  rigid  economy. 

Suppose  each  one  of  the  railway  employes  should,  by  bet- 
ter work  and  greater  care,  save  only  1 cent  a day;  that  would 
mean  for  the  country  $5,566,250  a year,  or  enough  to  buy  be- 
tween 5,000  and  6,000  freight  cars;  or,  enough  to  build  200 
miles  of  branch  line  railway  in  Montana.  If  they  could  save 
10  cents  a day,  it  would  mean  $55,662,550  a year,  which  could 
be  applied  to  adding  to  the  railway  facilities  in  the  country. 

Employes  in  Mines  In  addition  to  the  1,525,000  employes 
and  Factories.  working  directly  for  the  railways,  there 

are  2,500,000  in  coal  mines,  steel  mills, 
manufacturing  plants,  all  supplying  what  is  necessary  for  the 
railways  in  their  operations,  who  represent  at  least  10,000,000 
of  our  total  population.  So  the  railway  employes,  and  the 
employes  of  the  industries  dependent  more  or  less  on  its  main- 
tenance on  a sound  basis  represent  approximately  16,000,000 
people  whose  rights  must  be  considered. 

Purchases  of  The  railways  are  the  great  purchasers  of  mate- 
Railways.  rials  of  many  kinds,  and  the  moment  they  are 
forced  to  stop  buying  the  effect  begins  to  be 
felt  in  the  forest,  the  mine,  the  mill,  and  the  factory. 


19 


THE  RAILWAY  USER. 


Of  the  90,000,000  people  in  the  United  States,  there  are,  as 
already  pointed  out,  about  4,000,000  interested  directly  as  Rail- 
way Owners,  and  their  dependent  families;  6,000,000  as  Rail- 
way Employes,  and  their  dependent  families,  leaving  80,000,000 
as  Railway  Users,  with  an  indirect  interest  in  the  prosperity  of 
the  railway.  Some  of  these  80,000,000  are  vitally  interested, 
because  they  work  for  industries  dependent  upon  the  purchas- 
ing power  of  the  railway  for  their  success;  others  because  they 
have  their  savings  in  banks  and  Trust  Companies;  others  because 
they  hold  life  insurance  policies  for  the  protection  of  their  fam- 
ilies, and  fire  insurance  policies  for  the  protection  of  their  homes 
and  business,  and  all  are  interested  in  having  enough  transportation 
and  good  and  safe  transportation. 

True  Interest  of  The  Railway  User,  however,  is  too  apt 
Railway  User.  to  think  that  his  interest  lies  in  having 
railway  rates  constantly  reduced,  railway 
wages  constantly  raised,  and  railway  taxes  constantly  in- 
creased, forgetting  that  it  is  equally  important  to  him,  and 
really  more  important,  to  have  the  railway  system  of  the 
United  States  so  handled  that  capital  will  feel  safe  in  adding  to 
investments  necessary  to  furnish  the  transportation  that  the 
business  of  the  country  demands.  Already,  in  certain  parts  of 
the  country,  the  margin  between  adequate  and  inadequate 
transportation  is  too  small.  Only  last  winter,  between  the  Mis- 
souri River  and  Chicago,  and  in  the  vicinity  of  Chicago,  the 
railways  could  not  furnish  that  prompt  and  regular  service  that 
is  essential  for  a satisfactory  movement  of  the  commerce  of  the 
country. 

Montana  is  entering  upon  a great  era  of  development  and 
will  need  many  new  branch  lines,  but  suppose  that  the  railways 
east  of  the  Mississippi  River,  when  your  grain  and  cattle  reach 
there,  are  unable  to  handle  your  product  satisfactorily,  to  the 
Middle  West  and  the  far  East!  Such  failure  will  affect  every 
farmer  in  the  State. 


14 


The  Railway  User  needs  safe  and  adequate  transportation, 
and  it  will  be  furnished  just  so  long  as  the  business  pays.  The 
Railway  Owner  cannot  constantly  be  borrowing  money  for 
every  minor  improvement  and  addition  to  the  property.  The 
cry  is  sometimes  raised  that  the  railways  should  not  make  im- 
provements out  of  current  earnings;  they  should  not  make  all 
of  their  improvements  out  of  current  earnings;  but  they  should 
put  back  into  the  property  every  year  a substantial  amount  of 
their  earnings  for  improvements  like  better  passenger  stations, 
more  side  tracks,  better  rails,  better  ballast,  safety  appliances, 
and  other  forms  of  improvement  of  which  the  present  genera- 
tion of  railway  users  get  the  immediate  benefit,  as  well  as  en- 
abling a higher  development  of  the  country  for  their  children 
and  grandchildren. 

Co-operation.  The  Railway  Owner,  the  Railway  Employe, 
and  the  Railway  User  must  co-operate,  and 
all  must  remember  the  definition : “The  association  of  a num- 
ber of  persons  for  their  common  benefit.”  In  the  long  run 
it  will  not  benefit  the  Railway  User  to  crowd  down  rates  so  low, 
and  raise  taxes  so  high  that  he  takes  away  all  chance  of  profit 
from  the  Railway  Owner.  The  Railway  Employe  must  re- 
member that  in  the  long  run  he  will  not  profit  if  he  crowds  up 
wages  so  high  that  the  Railway  Owner  has  not  sufficient  mar- 
gin for  the  development  of  the  facilities  along  progressive  and 
safe  lines.  On  the  other  hand  the  Railway  Owner  must  in  fixing 
the  rates  do  so  in  such  a way  that  a healthy  development  of  the 
country  will  be  promoted. 

Individually,  the  Railway  Owner,  the  Railway  Employe, 
and  the  Railway  User,  when  they  discuss  the  subject,  are  fair, 
and  agree  there  should  be  fair  treatment  to  all. 

Importance  of  There  is,  however,  a school  of  politi- 

Correct  Information,  cians  who  make  wild  and  extravagant 

statements  and  who  are  assuming, 
without  knowing  the  facts,  and  with- 
out adequate  study  of  the  situation,  that  great  injustices  are 
being  done.  It  is  important  for  the  Railway  Employe  and  for 


15 


the  Railway  User  to  post  themselves  about  this  general  subject 
if  they  are  to  continue  to  exercise  their  present  control  in  the 
management  of  the  business  of  the  Railway  Owner.  His  busi- 
ness is  now  an  open  book,  and  every  transaction  is  recorded  in 
plain  black  and  white  and  reported  at  frequent  intervals  to 
Railway  Commissions,  State  or  National.  The  charges  that 
he  makes  for  service  performed  are  largely  decided  by  statute 
or  by  Railway  Commissions.  Many  of  the  rules  under  which 
he  conducts  his  business  are  made  by  law,  or  by  various  boards. 
The  Railway  User,  if  he  wants  the  best  railways  and  pro- 
gressive development  of  them,  must  see  to  it  that  his  law- 
makers and  his  boards  of  one  kind  and  another  are  the  right  kind 
of  men,  and  that  they  look  at  this  question,  not  in  a narrow,  par- 
tisan way,  but  in  a broad,  far-sighted  manner. 


OBEDIENCE  TO  THE  LAW. 

On  January  16,  1905,  Senator  Elkins  introduced  into  the  United 
State  Senate  a resolution  asking  the  Interstate  Commerce  Com- 
mission for  a statement  showing  the  work  done  by  that  body  with 
respect  to  formal  and  informal  complaints,  hearings,  decisions  of 
the  court,  exorbitant  rates  and  rebates  during  the  preceding  18 
years,  or  since  the  creation  of  the  Commission. 

On  May  1,  1905,  the  Commission  furnished  figures  showing 
that  the  total  number  of  complaints  which  reached  the  Commission 
was  9,099;  the  total  number  disposed  of  through  the  friendly  offices 
of  the  Commission  9,054,  or  more  than  99%  of  the  total.  The 
cases  appealed  by  the  Commission  to  the  courts  were  only  45 — 
about  one-half  of  1 % of  the  total  number  of  cases.  Of  the  45 
cases  appealed  to  the  courts  by  the  Commission,  only  8,  or  less 
than  one-fifth,  were  sustained  by  the  courts,  all  of  which  involved 
unjust  discriminations  (always  a difficult  question  in  our  com- 
plicated commercial  life)  and  not  a single  case  involved  an  exor- 
bitant rate.  Of  the  total  number  of  complaints  made  to  the  Com- 
mission, 8,319,  or  91%,  were  of  so  simple  and  unimportant  a 
character  that  they  were  disposed  of  informally. 

16 


During  these  18  years  the  separate  freight  transactions  of  the 
railways  in  the  United  States  were  in  excess  of  3,000,000,000,  or 
* there  was  one  complaint  for  each  330,000  separate  commercial 
transactions,  and  not  a single  serious  complaint  about  exorbitant 
rates.  Certainly  a marvelous  record  of  compliance  with  a law, 
and  one  not  equalled  anywhere  in  the  history  of  the  statutes  reg- 
ulating human  conduct — a compliance  that  should  refute  com- 
pletely the  idea  that  the  railway  business  needs  some  peculiar  treat- 
ment by  law  that  is  not  required  by  other  business  and  of  the  idea 
that  the  railways  do  not  try  to  obey  the  law. 

The  cost  to  the  county  of  the  Commerce  Commission  in  1888 
was  $97,867  and  in  1909  $988,936. 

Politics  and  In  the  past,  complaint  has  been  made  because  the 
Business.  railways  engaged  in  politics;  to-day,  the  country  is 
confronting  a danger  which  is  just  as  serious,  if 
not  more  so,  because  politics  are  now  taking  charge  of  the  railways 
and  other  forms  of  business,  and  assuming  the  responsibility  of 
many  parts  of  the  management,  but  with  no  responsibilty  for  the 
financial  results. 

What  is  the  The  Railway  Owners,  and  the  railway  officers  and 

Right  Spirit?  employes  are  just  as  loyal,  high-minded,  and  ener- 

getic and  industrious  citizens  of  the  United  States, 
as  a class,  as  any  other  body  of  men  in  the  country.  They  have  a 
great  task  imposed  upon  them,  which  they  are  manfully  trying  to 
carry  out,  and  at  times  it  seems  as  if  every  man’s  hand  was  against 
them. 

Edward  Everett  Hale,  one  of  the  grand  old  men  of  the  nine- 
teenth century,  who  passed  away  about  a year  ago,  put  into  four 
short  sentences  some  very  sound  philosophy  about  life,  as  follows : 

“Look  up,  and  not  down ; 

Look  out,  and  not  in ; 

Look  forward,  and  not  back; 

Lend  a hand.” 

Will  not  greater  progress  be  made  in  trying  to  put  this  great 
railway  business  on  a sound  basis  if  all  who  are  interested 
“look  up”  at  the  best  features  of  it,  and  of  the  men  engaged  in 


IT 


it,  and  not  assume  without  knowing  that  the  business  is  conducted 
improperly  and  that  the  men  giving  their  lives  to  the  work  are 
incompetent  or  dishonest?  Will  not  the  best  results  come  if  all 
“look  out”  from  their  own  surroundings  and  see  the  difficulties 
confronting  others  as  well  as  themselves  instead  of  thinking  only 
of  their  selfish,  local  advancement?  Will  not  the  best  results  be 
obtained  if  all  “look  forward”  with  hope  to  the  future  instead  of 
repining  over  the  mistakes  that  may  have  been  made  honestly  in 
the  past  in  the  effort  to  put  the  United  States  on  a sound  industrial 
basis?  Better  than  all,  will  not  the  best  results  be  obtained  if 
every  one  “lends  a hand,”  and  helps  instead  of  raising  all  sorts 
of  objections,  many  of  which  are  not  justified  when  the  facts  are 
known,  magnifying  the  errors  and  minimizing  the  good  work  done? 


Future  The  future  welfare  of  the  railway  system  of  the  United 
Welfare.  States  is  largely  in  the  hands  of  the  Railway  User,  and 
what  will  he  do?  Will  he  crowd  the  Railway  Owner 
so  hard  that  the  latter  cannot  produce  the  increasing  amount  of 
transportation  needed  for  the  free  flow  of  the  commercial  life 
blood  of  the  Nation?  Then  what?  The  Railway  User  will  have 
several  courses  open  to  him.  He  can  have  a less  rigid  sys- 

tem of  regulation  and  government  red  tape  and  encourage  the  rail- 
way business  and  the  Railway  Owner  to  go  on  as  does  other  busi- 
ness, subject  to  the  great  laws  of  supply  and  demand,  competition 
and  the  natural  desire  af  the  owner  to  manage  his  business  in  such 
a way  that  it  will  be  a success,  with  the  hope  of  profit,  which  is  the 
main  incentive  of  all  business.  Or,  he  can  take  over  the 

ownership  and  management  of  the  railways  and  become  responsible 
for  their  operation  and  for  the  money  needed  for  additions  and  bet- 
terments to  existing  properties,  and  for  the  building  of  new  ones. 
In  the  present  state  of  politics  in  this  country,  such  a plan  is  almost 
terrifying  in  its  possibilities,  because  the  government  has  not  shown 
that  it  can  do  work  of  this  character  as  efficiently  and  economically 
as  private  individuals  can.  Government  ownership,  management 
and  development  of  the  railways  would  become  a matter  for  the 
politicians  to  trade  upon.  Just  recently,  in  Austria,  there  has  been 


18 


considerable  discussion  because  the  railways  were  taken  over  by 
the  State  on  the  theory  that  better  service  and  lower  rates  would 
be  given  to  the  public.  Now,  there  is  agitation  to  put  them  back 
into  private  hands  for,  instead  oL  proving  profitable,  there  is  a 
heavy  annual  deficit,  which  the  general  taxpayer  has  to  make  up. 
The  service  has  deteriorated  and  railway  expansion  has  ceased. 

Or  he  can  continue  the  present  system  of  rigid  governmental 
control  and  supervision,  and  interference  with  the  judgment  and 
management  of  the  owner,  which  is  rapidly  having  a deadening  and 
discouraging  effect  on  the  development  of  the  business,  and  is  pre- 
venting those  additions  and  improvements  so  much  needed  in  a 
growing  country  like  the  United  States.  Or,  he  can  con- 

tinue the  present  system  of  government  regulation  and  con- 
trol, but  guarantee  to  the  railway  owner  some  minimum  re- 
turn upon  his  investment,  so  he  will  be  willing  to  put  money 
into  the  business.  Such  a plan,  however,  means  that  the  non- 
user of  the  railway  will  be  taxed  for  the  benefit  of  the  user. 

To  my  mind  the  first  course,  of  more  commercial  freedom,  is 
by  far  the  better  for  a growing  and  expanding  country  like  the 
United  States.  We  have  not  yet  reached  the  state  of  perfection, 
politically  or  socially,  where  government  ownership  and  bureau- 
cratic management  of  the  large,  complicated  and  delicately  adjusted 
railway  system  of  the  country  will  be  a success.  Putting  a govern- 
ment uniform  on  a railway  employe  does  not  at  once  endow  him 
with  a new  kind  of  intelligence  and  supernatural  powers,  and  it 
will  reduce  his  feeling  of  responsibility. 

Shortage  of  If  the  Railway  User  and  the  Railway  Employe 
Transportation,  are  not  careful  to  see  that  justice  is  done  to  the 
Railway  Owner,  and  if  he  is  not  protected  and 
encouraged  a little,  the  time  is  rapidly  coming  when  the  Railway 
User  will  go  to  buy  some  transportation  for  his  wheat,  his  coal, 
his  cattle,  his  manufactured  articles,  and  he  will  be  confronted  with 
the  statement  from  the  Railway  Owner  that  all  the  transportation 
he  has  has  been  sold,  and  furthermore,  that  he  cannot  produce  any 
more  transportation  because  he  cannot  get  any  more  money,  and 
if  the  Railway  User  desires  an  increased  quantity  or  quality  of 


19 


transportation  he  must  organize  and  produce  it  for  himself.  The 
Railway  Employe  will  find  that  the  monthly  pay  day  is  not  so  reg- 
ular and  certain  as  it  used  to  be,  and  that  the  wages  paid  are  lower 
than  they  now  are. 

Justice  from  The  ultimate  good  sense  of  the  American  peo- 

American  People,  pie  and  their  belief  in  the  rights  of  property 
will,  in  the  long  run,  I believe,  prevail  over 
the  misstatements  and  misrepresentations  of  some  public  men,  who, 
without  careful  study  and  full  knowledge  of  the  situation,  and  with- 
out due  regard  to  the  effect  of  their  extravagant  language,  make 
indiscriminate  attacks  upon  the  railway  system  of  the  United  States, 
and  upon  the  men  who  are  giving  the  best  that  is  in  them  to  the 
work  of  advancing  that  system. 

RECAPITULATION. 

This  wonderful  American  railway  system  has  been  created  by 
the  Railway  Owner  and  capitalized  at  from  one-half  to  one- 
fifth  of  the  European  railways.  It  does  twice  as  much  work  at 
rates  from  one-half  to  one-third  of,  and  pays  wages  from  two  to 
five  times  as  much  as  are  paid  by  European  railways.  The  size 
of  the  United  States  and  the  wide  distribution  of  the  products  are 
such  that  it  is  necessary  to  have  a large  use  of  the  railways  and 
low  rates.  To  accomplish  this,  there  must  be  an  expansion  of 
facilities;  the  Railway  Owner  has  done  his  part;  further  ex- 
pansion can  only  be  brought  about  through  the  help  of  the 
Railway  Employe  and  the  Railway  User. 

The  Railway  Owner,  the  Railway  Employe,  and  the  Railway 
User  form  an  “association  of  persons  who  should  act  for  their 
common  benefit ;”  not  for  the  benefit  of  one  and  the  injury  of 
the  other,  but  for  the  common  benefit  of  all.  There  has  just  been 
a meeting  in  St.  Paul  where  there  was  much  discussion  about  the 
Conservation  of  Natural  Resources.  It  is  high  time  for  the  Rail- 
way User  to  consider  carefully  the  Conservation  of  the  Railway 
System  of  the  United  States.  Common  sense,  publicity,  plain 
statements  of  the  facts,  and  justice  to  all  interests,  whether  indi- 
vidual or  corporate,  will  help  to  settle  this  question  properly. 


20 


